Correlation Between Tidal Trust and MicroSectors FANG

Can any of the company-specific risk be diversified away by investing in both Tidal Trust and MicroSectors FANG at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tidal Trust and MicroSectors FANG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tidal Trust II and MicroSectors FANG ETN, you can compare the effects of market volatilities on Tidal Trust and MicroSectors FANG and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tidal Trust with a short position of MicroSectors FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and MicroSectors FANG.

Diversification Opportunities for Tidal Trust and MicroSectors FANG

0.93

Correlation Coefficient

Tidal Trust  MicroSectors FANG

Almost no diversification

The 3 months correlation between Tidal and MicroSectors is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and MicroSectors FANG ETN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors FANG ETN and Tidal Trust is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tidal Trust II are associated (or correlated) with MicroSectors FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors FANG ETN has no effect on the direction of Tidal Trust i.e., Tidal Trust and MicroSectors FANG go up and down completely randomly.

Pair Corralation between Tidal Trust and MicroSectors FANG

Given the investment horizon of 90 days Tidal Trust II is expected to generate 1.07 times more return on investment than MicroSectors FANG. However, Tidal Trust is 1.07 times more volatile than MicroSectors FANG ETN. It trades about 0.27 of its potential returns per unit of risk. MicroSectors FANG ETN is currently generating about 0.27 per unit of risk. If you would invest  1,160  in Tidal Trust II on May 1, 2025 and sell it today you would earn a total of  250.00  from holding Tidal Trust II or generate 21.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Tidal Trust II  vs.  MicroSectors FANG ETN

Tidal Trust II

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Tidal Trust displayed solid returns over the last few months and may actually be approaching a breakup point.

MicroSectors FANG ETN

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MicroSectors FANG ETN are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, MicroSectors FANG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tidal Trust and MicroSectors FANG

The main advantage of trading using opposite Tidal Trust and MicroSectors FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, MicroSectors FANG can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MicroSectors FANG will offset losses from the drop in MicroSectors FANG's long position.

The idea behind Tidal Trust II and MicroSectors FANG ETN pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.